A Firm Is Shunning Away From Real Estate Industry
Decisions CEOs make in any industry impacts greatly on the future of a firm. Eddie Lampert, the CEO of Sears recently made a decision that could see Sears dropping out of the competitive real estate market. The retail management on fashion and home appliances. This is seen by many in the industry as a set back because Sears Holding has not been delivering up to the mark lawn and garden merchandise as well as new in-box home appliances.
This retailer company is said to be slow when it comes to obtaining new merchandise and appliances from vendors something their prime competitors including Lowes, Home Depot, Macy’s, Kohl’s and J.C.Penny. When retailers fail to ship goods from the vendors, it’s a real concern especially for a top retailer company like the Sears.
“It’s really the cat’s house — we just pay the mortgage.” ~ Unknown Author
Is Sears Taking The Wrong Turn?
Even though the future of the company remain uncertain, there is still hope as most clients have a touch for their strong brands like Kenmore appliances. Some of other brands that can save the firm from disappearing in the retailer’s market include the Die Hard Batteries and craftsman tools. The announcement that the company will lay their focus on fashion is baffling. Their displays lack that enchanting impact that lures in fashion lovers. The fact that Sears is joining the fashion market will trigger in competition from renowned rivals which may in turn hurt Sears’ gross margins. The gross profit of the company reduced by $310 million owing to a number of factors ranging from deconsolidation of Sears Canada in October 2014 to Kmart full line store closure. Because of the competition robust stores remained open while the weaker ones closed down leading to higher gross margin rates.
What’s going on in the Real Estate Management Arena?
Sears closed some stores to let in Primark as well as other firms occupy the place. In the first quarter of the year, they have started a program that will involve the sale of 235 Kmart and Sears stores. The Seritage Growth Property REIT when combined from revenue gotten from joint ventures will generate about $3 billion. This will allow the company to pay its revolver borrowings and about $2.7 billion in cash is expected to remain. This well-thought initiative has made other retailer firms in the real estate industry to think about their future.
Creating True Value for Customers
Innovative and hi-tech retail merchandising can be a great and would work better for both the shareholders and customers instead of selling the real estate. The all idea of REIT is fascinating but it seems the Sears’s CEO has not yet considered the value of customers in every business. In Lampert’s perspective, clients are seen as technocrats who shop because of various loyalty programs a retailer has. It is crystal that his intention is to sell Sears’ real estate holdings to get as more revenue as possible.